The FCC Transition?

Scott Cleland is a precursor: a proven thought leader with a long track record of industry firsts. Cleland is President of Precursor® LLC, a Fortune 500 research consultancy specializing in the future of Internet competition, property rights, privacy, cyber-security and cyber-ideology; algorithmic markets; and communications competition and de-regulation. Cleland authors the widely-read PrecursorBlog and serves as Chairman of NetCompetition® a pro-competition e-forum supported by broadband interests. A world-leading research authority on Google, Cleland authored the book: Search & Destroy: Why You Can't Trust Google Inc. and is publisher of the watchdog site Google Monitor. Cleland served as Deputy United States Coordinator for Communications and Information Policy in the George H. W. Bush Administration. Eight Congressional subcommittees have sought Cleland’s expert testimony and Institutional Investor twice ranked him the #1 independent analyst in his field. Scott Cleland has been profiled in Fortune, National Journal, Barrons, WSJ’s Smart Money, and Investors Business Daily. Ten publications have featured his op-eds. For a full bio see: www.ScottCleland.com.

That’s why, Tom Wheeler, the President’s nominee for Chairman of the FCC, could become one of the most consequential FCC leaders in American history.

As a longtime communications industry leader and also an accomplished historian, he appreciates more than most anyone the hinge in time in which he now finds himself.

The FCC is in the throes of a seminal historical transition. Like the 1913 Kingsbury Commitment that created a national telephone monopoly. Like the 1934 Communications Act that created the FCC and mandated universal telephone service. And like the 1996 Telecom Act that mandated competition policy replace monopoly regulation.

Today, companies and consumers have adapted to, and enjoy the benefits of, the transition to the competitive Internet marketplace that we all live in today. In contrast the Government, particularly the FCC and Federal holders of radio spectrum, have not made the transition.

And to make matters worse, they are inherently hostile to transitioning their mission, methods and mindset to the new competitive Internet era.

Common carrier regulation ended for: railroads 37 years ago; trucking and bus-lines 33 years ago; and airlines 29 years ago. Why does the FCC still cling to 1887 common-carrier railroad regulation for communications when it became obsolete in every other industry?

Common carrier regulation of communications is unnecessary and irrelevant, given the Internet, robust facilities-based competition, and the mobile broadband revolution of smart-phones and tablets.

Why can’t the FCC make the transition to the modern reality where competition, consumer choice and innovation wildly out-perform regulation? Market forces have delivered universal availability of both wire line and wireless broadband in less than a decade when it took the FCC several decades longer to deliver universal availability of telephone service.

Under FCC regulation the telephone changed little for over a half century. In seventeen years of competition policy, consumers and businesses have enjoyed the vast choice of: hundreds of Internet- enabled devices and several broadband providers offering different technology options.

Still there are many inside and outside of the FCC that stubbornly deny market reality. They define “the public interest” to be what the few think is best for the many, rather than letting the many continue to choose what’s best for themselves from the panoply of choices in the competitive Internet marketplace.

As the Administration’s point person responsible for the DTV transition from analog to digital television four years ago, Mr. Wheeler understands big transitions and has successfully led one. His proven transition leadership skills and experience will be essential given the many strategically important transitions currently in train that need to be successfully led at the FCC.

First, the FCC transition must be led. The FCC can no longer ignore reality and torture obsolete statutes, precedents and regulations to procrastinate and avoid the needed FCC transition to the competitive Internet reality.

If the courts tell the FCC they do not have the statutory authority to do what they believe is necessary, the FCC should either appeal, or propose to Congress the legislative authority that they believe they need to operate as a modern FCC.

Continuing to ignore the courts, Congress, and the Constitution is not a sustainable or productive FCC policy. It is akin to holding one’s breath until one gets one’s way.

The FCC transition requires strategic leadership to navigate from a legacy-dependent, backward-looking, self-centered institution to a more modern, humble, nimble and externally-focused institution able to keep up with the times.

The FCC is in desperate need of a leader that understands that the FCC can’t be the only part of the communications ecosystem that is not modern. The American consumer and competitive, innovative industries deserve better.

Second, the IP transition must be led from the obsolescent monopoly telephone price regulation regime to an enforcement regime of consumer protection. This transition cannot be ignored as the number of subscribers to the Public Switched Telephone Network (PSTN) has fallen by two thirds due to competition and wireless/Internet substitution.

And during Mr. Wheeler’s expected tenure that number of legacy subscribers to the PSTN is expected to drop to ~10% of Americans, similar to the number of legacy over-the-air broadcast consumers.

Continuing to operate a system designed for everyone, when only ~10% may still use it, makes no sense.

Third, the spectrum transition must be led from the Government controlling ~85% of the nation’s radio spectrum suitable for wireless broadband, to about 20% over the next decade or two.

Controlling ~85% of spectrum makes no sense when the Federal Government only uses 1% of the nation’s energy; provides 8% of the nation’s employment; produces 12% of the nation’s GDP; and gets by with 30% of the nation’s land.

Leadership is desperately needed to transition the Federal Government from wasting valuable radio spectrum to applying modern, good-government, management and accountability practices to spectrum.

Fourth, the public safety transition must be led to ensure that the 9-11 recommendation for an interoperable public safety network finally happens, and does not fall on its face again because of avoidable FCC implementation mistakes.

In sum, this is an exceptionally consequential hinge in time for the FCC. Mr. Wheeler has the opportunity and challenge to lead the FCC into the modern era, so the FCC can return to being part of the solution and not the problem for consumers.

Simply, the FCC can no longer kick the proverbial can down the road; that road is ending.